Background: This study will describe and analyze pharmaceutical consumption patterns and costs of care for older Americans. Data are from the Oregon Public Employees Retirement System (Oregon PERS) for July l, 1988-June 30, 1993 (60 mos). The patient's share of the cost of each prescription increased several times during this period. Oregon PERS is responsible for providing Medicare supplemental health care benefits including a prescription drug program to over 18,000 elderly individuals and family members per year. During the first 26 months of the study period, Oregon PERS beneficiaries filled more than 500,000 prescriptions at a cost of more than $18 million. This study is unique in that it will analyze data on pharmaceutical utilization in a general elderly population. Such data are not generally available. Specific aim: To analyze the impact of changes in the structure of the pharmaceutical benefit on (a) utilization and expenditures for drugs overall and in selected therapeutic categories, (b) use of brand-name compared with generic drugs, and (c) medical care costs and utilization rates overall and for selected conditions. Significance: Americans over age 65 represent 12% of the total population, yet consume more than 30% of all dispensed medications. Approximately 427 million prescriptions were dispensed to the noninstitutionalized elderly in 1987 at a cost of over $7.2 billion. Outpatient prescription drugs currently are not a covered benefit of the Medicare program, and constitute the second largest share of out-of-pocket health care expenditures for the elderly and a significant expense for Medicare supplemental carriers.